Despite the credit freeze, American college students last year used credit cards more than ever before, including charging tuition and other direct education expenses, according to a new study from Sallie Mae, the nation’s leading saving- and paying-for-college company.
Nearly one-third, or 30 percent, put tuition on their credit card. That was an increase from 24 percent in 2004, when the study was last conducted. In total, 92 percent of undergraduate credit cardholders charged textbooks, school supplies, or other direct education expenses. That’s up from 85 percent in the previous study.
Students who used credit cards to pay for direct education expenses estimated charging $2,200, more than double 2004’s average of $942.
“Too many students are at risk of overpaying for college by pulling out credit cards to pay for textbooks or even part of their tuition bill, instead of using less expensive financial aid to cover these items,” said Marie O’Malley, director of consumer research for Sallie Mae and author of the study. “Students and families need to build a comprehensive budget ahead of time to cover not only tuition, but also other necessities like supplies and travel costs that contribute to the overall cost of college.”
84 percent of undergraduates had at least one credit card, up from 76 percent in 2004. On average, students have 4.6 credit cards, and half of college students had four or more cards. The average (mean) balance grew to $3,173, higher than any of the previous studies. Median debt grew from 2004’s $946 to $1,645.
The higher the grade level, the more heavily students used their credit cards, with seniors graduating with an average credit card debt of more than $4,100, up from about $2,900 in 2004. The study found that freshmen carried a median debt of $939, nearly triple the $373 in 2004. Only 15 percent of freshmen had a zero credit card balance, a dramatic drop from 69 percent in the 2004 study.
Many college students seem to use credit cards to live beyond their means—not just for convenience—and more than three-quarters incurred finance charges by carrying a monthly balance.
The study also found that only 17 percent of the students said they regularly paid off all cards each month. Another 1 percent had parents, a spouse, or other family members paying the bill. The remaining 82 percent carried balances and thus incurred finance charges each month.
Student debt is a huge problem at FAMU. Most of the student body comes from families that make less than $40,000 per year. By the time they graduate, FAMU students owe an average of $29,742 each. That was the highest reported number among all Florida’s public universities. Many students try to avoid additional debt by working long hours and taking smaller course loads, which hurts FAMU's graduation rate.
FAMU students drowning in debt
Nearly one-third, or 30 percent, put tuition on their credit card. That was an increase from 24 percent in 2004, when the study was last conducted. In total, 92 percent of undergraduate credit cardholders charged textbooks, school supplies, or other direct education expenses. That’s up from 85 percent in the previous study.
Students who used credit cards to pay for direct education expenses estimated charging $2,200, more than double 2004’s average of $942.
“Too many students are at risk of overpaying for college by pulling out credit cards to pay for textbooks or even part of their tuition bill, instead of using less expensive financial aid to cover these items,” said Marie O’Malley, director of consumer research for Sallie Mae and author of the study. “Students and families need to build a comprehensive budget ahead of time to cover not only tuition, but also other necessities like supplies and travel costs that contribute to the overall cost of college.”
84 percent of undergraduates had at least one credit card, up from 76 percent in 2004. On average, students have 4.6 credit cards, and half of college students had four or more cards. The average (mean) balance grew to $3,173, higher than any of the previous studies. Median debt grew from 2004’s $946 to $1,645.
The higher the grade level, the more heavily students used their credit cards, with seniors graduating with an average credit card debt of more than $4,100, up from about $2,900 in 2004. The study found that freshmen carried a median debt of $939, nearly triple the $373 in 2004. Only 15 percent of freshmen had a zero credit card balance, a dramatic drop from 69 percent in the 2004 study.
Many college students seem to use credit cards to live beyond their means—not just for convenience—and more than three-quarters incurred finance charges by carrying a monthly balance.
The study also found that only 17 percent of the students said they regularly paid off all cards each month. Another 1 percent had parents, a spouse, or other family members paying the bill. The remaining 82 percent carried balances and thus incurred finance charges each month.
Student debt is a huge problem at FAMU. Most of the student body comes from families that make less than $40,000 per year. By the time they graduate, FAMU students owe an average of $29,742 each. That was the highest reported number among all Florida’s public universities. Many students try to avoid additional debt by working long hours and taking smaller course loads, which hurts FAMU's graduation rate.
FAMU students drowning in debt
More like taking on debt to purchase cars, rims, pay rent, City of Tallahassee utilities, and designer clothes.
ReplyDeleteCollege sees less than 1/3 of these student's $$$$
"In total, 92 percent of undergraduate credit cardholders charged textbooks, school supplies, or other direct education expenses."
ReplyDeleteWhere is the proof that most students are using credit cards to buy cars, rims and designer clothes? Please post a link to a survey or study that provides evidence of your claim.
Take a ride through the parking lot at FAMU. You'll see. Rim city !!!
ReplyDeleteThere are some rims on campus but FAMU is far from being "Rim City." Most of rimmed cars are driven by locals who circle campus playing loud music. They're not even enrolled at FAMU.
ReplyDeleteIf your rims cost more than you make in a day...there is a proverb about a fool and his money that you should be aware of.
ReplyDeletegiving teenagers credit cards is like giving them whiskey and the car keys.
ReplyDeletePlenty of FAMU students have rims and cars with those speakers on the outside blasting.
ReplyDeleteHow many is "plenty?" We know for a fact that most of FAMU's
ReplyDeletestudents are far from wealthy.
Freshmen are required to live on campus and are not even given parking passes. They have to ride the bus.
It looks like many casual observers are using a few rimmed cars to represent the entire student body.
why is it when you drive through the slums (or the lower middle class sections), you see such nice cars? You see cars that HAVE to be worth more than folk's houses.
ReplyDeleteTHEN, you ride through the REALLY upscale side of town and folks that live in $500,000+ houses are driving beaters?
Then you drive through the middle class areas ($200 to $300K homes) and folks are driving a brand new pickup or Lexus?
I have been house hunting all over town.. and this seems to be the general reality.
It seems that the rich folks might be rich because they do not waste their money on stuff (like a car) that drops in value so quickly. I see very few rims in the nice neighborhoods. They seem more concentrated in the really poor areas of town.
What do you think?
full disclose on last comment: I once bought rims for my Mustang GT when I was living in a double wide trailer after college. Currently: I drive a '04 malibu that needs some body work, a '97 ford van that needs a paint job, and I live in a $475k house. Net worth approaching 7 figures.
ReplyDeleteOk, some people don't get it. You obviously don't want to understand so, back to the students and their debt. You can tell by the amount of parking that a minor amount of FAMU students even drive cars. You see what you want to see and then ask questions like you don't know what country you live in, or the dynamics within lol. I'm a student, I can tell you what it really is like. Go Rattlers.
ReplyDelete12:06. And your point is?
ReplyDelete